Commerce Reporter
ISLAMABAD: Pakistan on Friday allowed the import of nearly $300 million worth of urea and wheat through open tenders after its efforts to import through government-to government deals failed amid a rush to bridge the expected shortfall in coming months. In addition to approving the tender for import of 380,000 tons of wheat for $373 per ton, the Economic Coordination Committee (ECC) of the cabinet also authorised the state trading agency to explore options for import of another 800,000 tons.
The cost of 380,000 tons is $142 million while the total price of 800,000 tons will be determined once the deals are finalised. Headed by Finance Minister Ishaq Dar, the ECC permitted the release of one million tons of imported wheat from government warehouses aimed at meeting the daily needs of provinces. The ECC allowed the Trading Corporation of Pakistan (TCP) to sign a contract for the lowest bid of $520 per ton for the import of 300,000 tons of urea. TCP floated an international tender on October 19, 2022 and it was opened on October 26. Among the three bidders, the lowest responsive bid was of $520 per ton, which would cost the country $156 million.
There is a shortage of both commodities that can impact the country’s food security if timely imports are not made. The government tried to import urea from Azerbaijan, China, Saudi Arabia and Iran under government-to-government deals on deferred payments. But no nation showed interest. The Ministry of National Food Security and Research recommended immediate import of urea to ensure that there was no shortage of the essential input for wheat sowing. The ECC approved the award of the 6th International Wheat Tender 2022, opened on October 26, for 380,000 tons at $373 per ton. The government has already imported nearly one million tons of wheat but still faces the challenge of meeting domestic needs, if 1.6 million tons are not imported before the start of next cultivation in April.
Prime Minister Shehbaz Sharif has turned down a proposal to allow the import of 800,000 tons of wheat by the private sector due to the limited foreign exchange reserves. The Ministry of National Food Security on Friday tabled a summary for import of 800,000 tons of wheat through the TCP by the government. It was submitted that the ECC in May 2022 allowed the TCP to import 3 million tons of wheat and directed to devise import modalities. The modalities were devised and the TCP was allowed to import one million tons of specified milling wheat through an international tender. Later, public wheat stocks were verified and it was reported that the actual shortfall would be 2.6 million tons instead of 3 million tons.
Therefore, the TCP was allowed to import only 800,000 tons through an open tender as well as through governmentto-government basis out of the remaining 1.6 million tons, according to the decision.
The ECC approved the proposal and allowed the TCP to arrange the import of remaining quantity of 800,000 tons through an open tender or G2G arrangement, before harvesting the new crop.
However, the meeting was informed that efforts to import wheat from Russia under a G2G deal had remained fruitless. The cabinet body was cautioned that if the additional wheat was not immediately imported, then there might be shortage of the commodity by March next year. Pakistan Agriculture Storage and Services Corporation (Passco) has wheat stocks of 3.5 million tons, which will turn negative if the additional demand of provinces is met without more imports.
The Ministry of National Food Security submitted another summary regarding the requests of food departments of Punjab, Sindh, Khyber-Pakhtunkhwa and Balochistan for an additional supply of imported wheat from Passco stocks. Considering the urgent demand from the provinces and subject to the approval of respective provincial cabinets, the ECC granted permission to provide one million tons of imported wheat from Passco stocks. Punjab will get 500,000 tons against the additional demand for one million tons. Sindh will be given 300,000 tons while Khyber-Pakhtunkhwa will receive 200,000 tons. But the provinces will have to pay full cost and incidental charges to Passco.
Furthermore, 40,000 tons of local and imported wheat at a ratio of 50:50 with full cost and incidentals of Passco may be provided to Balochistan. The Ministry of Commerce presented a summary for the suspension of import conditions contained in the Import Policy Order 2022 concerning the import of timber/ wood.
